According to the The Washington Post, there are more than 34,000 dollar stores in the country alone—which is more than all the Walmart, Starbucks, and McDonald’s locations combined. Despite the name, however, in many dollar stores, you’ll find many products priced higher than a buck. Dollar Tree has maintained its status as one of the last true dollar stores in the U.S. over the past few years, unlike fellow discount chains Dollar General and Family Dollar. In 2019, the company began opening Dollar Tree Plus stores, which offer certain items for $3 to $5. But now, Dollar Tree is warning that a major change in pricing is coming to its original concept stores soon as well. Read on to find out how and when the discount chain is planning to hike prices.
The days of $1 products at Dollar Tree might be over soon. In a quarterly earnings report released Nov. 23, the company announced that it will be raising the prices on the majority of its products to $1.25 by the first quarter of 2022.
“For 35 years, Dollar Tree has managed through inflationary periods to maintain the everything-for-one-dollar philosophy that distinguished Dollar Tree and made it one of the most successful retail concepts for three decades,” the discount chain said in its announcement. “However … the company believes this is the appropriate time to shift away from the constraints of the $1.00 price point.”
According to the announcement, nearly 200 legacy Dollar Tree stores have already introduced this higher price point. The company plans to expand this to more than 2,000 additional legacy Dollar Tree stores in December 2021 before completing the rollout to all stores by the end of next year’s first quarter.
“Our leadership team has been planning for the expansion of this initiative since late summer,” Michael Witynski, the president and chief executive officer of Dollar Tree, said during the company’s third quarter earnings call on Nov. 23. “We are extremely focused on flawless execution and are providing our leadership team out in the field with tools to support a seamless transition.”
According to Dollar Tree, this price hike will make a significant difference in what the discount chain is able to offer in its stores. While it will allow new products to be sold, it will also help the retailer reintroduce “many customer favorites and key traffic-driving products” that were discontinued from its stores previously because Dollar Tree’s original price limit was too constraining, the announcement states.
“The $1.25 price point, which will apply to a majority of Dollar Tree’s assortment, will enhance the company’s ability to materially expand its offerings, introduce new products and sizes, and provide families with more of their daily essentials,” Dollar Tree said in its announcement.
RELATED: For more retail news, sign up for our daily newsletter.
Many retailers have been raising the prices of certain products over the last year due to supply chain issues and inflation. During a Nov. 14 interview on CBS’ Face the Nation, Janet Yellen, the current Secretary of the Treasury, said it was likely that prices will return to normal by the end of 2022, once the economy recovers enough from the COVID pandemic. But Dollar Tree explained that its price hike won’t be a temporary change.
“This decision is permanent and is not a reaction to short-term or transitory market condition,” the discount chain confirmed in its report.
Dollar Tree started tested higher prices at some of its stores in September 2021, adding additional price points to all Dollar Tree Plus stores and to select legacy Dollar Tree stores. The retailer said that part of its decision to expand higher prices to all stores was the result of positive customer feedback and store performance during this initial testing.
“Our Dollar Tree pricing tests have demonstrated broad consumer acceptance of the new price point and excitement about the additional offerings and extreme value we will be able to provide,” Witynski said in a statement on Nov. 23.
According to Dollar Tree, 77 percent of shoppers surveyed at stores with higher prices indicated that they were immediately made aware of the new price point when visiting the store. And 91 percent of those surveyed said they would continue to shop at Dollar Tree with the same or increased frequency, despite needing to spend a little more money.
“Many have also indicated they are seeing price increases across the market and that Dollar Tree is still providing the products they need at an undeniable value,” the discount chain stated in its quarterly earnings announcement. “As key traffic-driving products are reintroduced, the company is confident that customers will be extremely pleased with the even greater value they will discover on store shelves.”